What if the government guaranteed you an income?

By David R. Wheeler

Updated 1:54 PM ET, Mon April 14, 2014

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Photos:Income inequality in America

Income inequality in America – In the early 20th century, industrial tycoons like the Rockefellers and Carnegies amassed fortunes in railroads, steel or oil. Here, a view of Cornelius Vanderbilt's residence in New York in 1908.

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Photos:Income inequality in America

Income inequality in America – Wealthy passengers aboard a ship near San Francisco, circa 1910s. In this era, the top earners accounted for roughly 18% of the national income.

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Photos:Income inequality in America

Income inequality in America – People gathered across from the New York Stock Exchange on "Black Thursday," October 24, 1929. The stock market crash of 1929, fueled by excessive speculation on Wall Street, set off the Great Depression.

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Photos:Income inequality in America

Income inequality in America – Thousands of unemployed people waited in line to register for federal relief jobs in New York in 1933. The unemployment rate rose to 25% that year.

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Photos:Income inequality in America

Income inequality in America – On September 12, 1935, Franklin D. Roosevelt and his staff met to find a solution to the economic crisis. FDR's New Deal policies tightened regulation of Wall Street, strengthened unions and set the top marginal tax rate for the rich at 90%.

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Photos:Income inequality in America

Income inequality in America – A nurse takes care of children of migratory farm workers in Arvin, California, in 1937. The unemployment rate hovered in the teens. FDR created large-scale public work programs to provide jobs for the poor and middle class.

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Photos:Income inequality in America

Income inequality in America – A plant in Toledo, Ohio, that made bombs. With the advent of World War II, demand for production of goods and services increased. By the mid-1940s, the unemployment rate dropped to less than 5%.

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Income inequality in America – Labor unions benefited from FDR's policies and grew in power midcentury. Transit workers protested in New York on April 17, 1950. The Transport Workers Union threatened a strike if even one worker was punished for demonstrating.

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Income inequality in America – Truck supervisor Bernard Levey with his family in front of their new home in 1950. The post-war period was a prosperous time for middle-class Americans.

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Photos:Income inequality in America

Income inequality in America – From the 1950s to the 1970s, income inequality fell. Some economists call this period "The Great Compression." The median income at the time allowed a single earner to purchase a modest house and a car, support a wife and three children.

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Photos:Income inequality in America

Income inequality in America – A worker at the Department of Motor Vehicles in Sacramento, California, in 1966. The feminist movement fought for equal pay for women, who were earning about 60 cents for every dollar earned by men.

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Income inequality in America – In the 1970s, income inequality began to rise. The economy experienced wage and inflation problems, along with an oil crisis that caused a gasoline shortage. Here, a gas station in New York.

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Income inequality in America – Post-1979 has been called the "Great Divergence." Some say that President Ronald Reagan's policy of supply-side economics, which reduced taxes for the rich, was a contributing factor.

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Income inequality in America – Real estate tycoon Donald Trump with his Rolls Royce at his Mar-a-Largo property in Palm Beach, Florida.

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Income inequality in America – The 138-meter (453-foot) yacht "Rising Sun" was purchased by Larry Ellison of Oracle, who has been one of the nation's highest-paid executives. From the 1990s on, CEO compensation greatly outpaced the average compensation of workers.

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Income inequality in America – Home construction in Inverness, Illinois, in 2006. Risky mortgage lending was packaged by banks that sought to make big profits. The collapse of housing bubble instigated a credit crisis that triggered the global financial meltdown of 2007.

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Income inequality in America – By 2007, the top 1% accounted for 24% of national income. Bernard Madoff, whose Ponzi scheme is one of largest financial frauds in history, made billions off hapless investors. Here, shoes that once belonged to Madoff.

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Income inequality in America – Lehman Brothers, which collapsed in September 2008, filed for the largest bankruptcy in U.S. history. Major financial institutions were bailed out by the government with a massive amount of taxpayer money.

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Income inequality in America – John Thain, former CEO of Merrill Lynch, doled out more than $4 billion in bonuses to employees. Despite the worst economic crisis since the Great Depression, Wall Street handed out $18.4 billion in bonuses for 2008, which is the "sixth-largest haul on record."

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Income inequality in America – A job fair in March 2009. Unemployment rose to 10% during the Great Recession.

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Income inequality in America – In September 2011, the Occupy Wall Street movement sprang up. The average income, adjusted for inflation, grew $59 from 1966 to 2011 for the bottom 90% of Americans.

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Income inequality in America – Occupy Oakland protesters in California. In 2012, the income of the top 1% increased nearly 20% compared with a 1% increase for 99% of Americans.

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Income inequality in America – A suite at the Four Seasons Hotel in New York City costs $45,000 a night. Middle class Americans had a median household income of a little over $51,000 in 2013.

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Income inequality in America – Today, the top 1% controls about 40% of national wealth. At a hearing in Washington D.C. about Wall Street and the financial crisis, protesters hold a placard depicting Goldman Sachs CEO Lloyd Blankfein, who once famously said, "I'm doing God's work."

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Story highlights

David Wheeler: U.S. should provide a monthly cash payment to every American

Wheeler: A guaranteed minimum income can address unemployment issue

He says it would be a psychological benefit, lift the economy, and create stability

Wheeler: It is also cheaper than our current malfunctioning safety net

First, the bad news: Even if the economy improves, middle-class career paths will continue to disappear as globalization and technological innovation render more jobs obsolete.

Now, the good news: The fear, stress and humiliation caused by unemployment (and underemployment) can be alleviated with a simple solution.

And now, the even-better news: This simple solution is starting to find backers on both sides of the political spectrum.

A monthly cash payment to every American, no questions asked, would solve several of our most daunting challenges. It's called a basic income, and it's cheaper and much more effective than our current malfunctioning safety net, which costs nearly $1 trillion per year.

David Wheeler

The idea of a basic income, sometimes called a guaranteed minimum income or a negative income tax, has been discussed for decades by notable economists like Milton Friedman. In the late 1960s and 1970s, the idea had bipartisan backing before losing steam. Recently, in the face of a sputtering economy, a weak job market and rising income inequality, it has been gathering supporters at an ever-quickening pace.

In fact, just last month, former U.S. Labor Secretary Robert Reich called a basic income guarantee "almost inevitable."

The concept of a basic income is not entirely abstract. Several countries, such as Brazil, have achieved notable success with their programs, lifting many people out of poverty. In countries like India, nongovernmental organizations are experimenting with pilot programs in specific areas, with promising results so far.

The United States is already experimenting with a variation of basic income, even though most people don't realize it. Alaska has a small version, called a Permanent Fund Dividend, which is incredibly popular and made the state one of the most economically equal places in America. Importantly, Alaskans don't consider it "redistribution," but rather "joint ownership."

The benefits of a basic income on a national scale would be wide-ranging. First, there's the lift to the overall economy if everyone has money to spend. Next, there are the obvious psychological benefits of knowing you can always afford food and shelter. Then there's the societal stability factor: If people's basic economic needs are being met—no matter what the unpredictable job market is doing—we don't have to worry about the potential for civil unrest as a result of mass unemployment.

Economist Gar Alperovitz told me that a guaranteed minimum income would not only defuse the political crisis posed by worsening long-term unemployment, but would also open up the possibility of a reduction in the length of the work week.

Due partly to technological innovation, we already have a situation where less work is spread among more people, and this phenomenon will increase in the future. With a basic income, this development is nothing to fear.

"Once people have the freedom to elect to work less, their capacity to engage in the work of rebuilding community and democracy can increase far beyond what is possible in today's precariously overworked society," Alperovitz said.

At the moment, the idea of a guaranteed minimum income might be more popular with liberals than conservatives. But lately, conservative thinkers have become more outspoken in their support of the concept.

Philosopher Matt Zwolinski has made a libertarian case for a basic income. "Conservatives care about limiting the power of government and increasing personal responsibility. ... Compared to our current welfare state, a basic income does both. Instead of a vast bureaucracy of over 120 different antipoverty programs at the federal level, you've got a program so simple it could be administered by a piece of software."

Furthermore, he said, instead of subjecting the poor to a host of invasive, paternalistic and degrading requirements designed to make sure they're behaving in ways the government approves of, a basic income gives them cash, and asks them to take responsibility for spending that money to improve their own condition.

Of course, all government programs have imperfections, and the basic income idea has an obvious one: There will still be people incapable of functioning in daily life—people who will spend their money before paying for basic necessities. What should be done about these "moochers"?

My answer is that housing shelters and soup kitchens could continue to exist, helping people who cannot be helped in any other way. But the cost of these programs is just a tiny fraction of the overall safety net, and in cities with strong religious and philanthropic support, they would not need to be financed by the government at all. No one needs to sleep on the street.

Another objection: What if people want to work more, not less? No problem. Want multiple jobs? Go right ahead and take them. As advocates of a basic income point out, nothing would keep people from working and earning as much as they want.

The global economy will experience big and small changes in the coming decades. We must do something to avoid a future of high unemployment and misery. A guaranteed minimal income is a way to start.